Your Secret Spy Mission - How to Perform a Solid Competitor Analysis
Competition is the backbone of doing business in this country. You may have a great idea but someone else may already be doing what you want to do or they may be doing it better. How can you compete in your industry? What are you doing that will set you apart? Competition can be scary to a new business owner. How can you make sure that you are using this competition to your advantage? What are the best methods for performing a competitor analysis?
A few weeks ago, I introduced you to my friend Fretful Fred. He was very disheartened by working typical jobs. He couldn’t imagine working to retirement in the traditional office job. He always dreamed of starting his own business. Fred is a successful entrepreneur now but he remembers how difficult it was to start and how insecure he felt in everything he did.
Fretful Fred remembers the day that he met an older man at the park named Yoda. Fred explained to Yoda that he wanted to start a construction business. Over time, Yoda became Fred’s most trusted advisor. He was the mentor that Fred never realized he wanted or needed. In the beginning, Yoda provided Fred with some small general advice. Yoda was able to give him 13 small business tips to get started.
Yoda also gave Fretful Fred some fantastic advice on creating new ideas for his business. Yoda and Fretful Fred planned on meeting each week to discuss other helpful small business tips. In the beginning, Fred desperately needed advice on how he should deal with competition and how he could be successful in competing with others in the business. Should he be researching his competitors? What exactly was a competitor analysis? What should he know? Was it ethical to research the competition?
Fretful Fred’s Journey Continues….
Fretful Fred and Yoda met at a coffee house directly across the street from one of the biggest construction companies in the city. Fred was nervous because he didn’t want to seem like he was spying.
He asked Yoda, “Should we be here? The owners of that construction company don’t know I exist yet but what if later they remember me and think I was spying on them?” Yoda smiled and said, “Don’t be nervous, I am going to explain to you why we are here and how this can benefit you.” Let me ask you a question, “How do you think you can succeed without understanding what your competition is doing?”
Fretful Fred replied, “I can do my own thing and people will like my product because it is better.” Yoda said, “How do you know it is better? How do you know what your customers want? How do you know how to set up the mission and vision of your company if you don’t know what others are doing?
How do you know what you do not know?”
Fred was very frustrated at this point. Yoda seemed to be speaking in circles. Fred asked in frustration, “How do I get the information I need and still remain true to my values?”
Yoda replied, “Let’s go on a journey of the mind. We will explore how to perform a competitor analysis and you will see how easily this information is available to you and that it is ethical as long as you do it the right way.”
Problem #1 - Who are your competitors and what do you need to know about them?
Who is offering the same service you are providing? Who in the market offers a service or product that could be a substitute for what you are providing?
If you are planning on starting a construction business, look online to see who is already in the business. You should include any business that can provide building services to your potential customers, not just local businesses. Determine if the business is doing the building themselves or outsourcing it. If they are outsourcing it, how long does it take for a customer to get something built?
Look for 5 - 10 competitors that customers could turn to if you didn’t exist. How do they fulfill the requirement of their customers? How are they branding themselves? What niche are they fulfilling? What prices do they charge? Do they publish content? How often do they publish content and who are they targeting? What kind of engagement are they getting with their content?
This information is best captured in a spreadsheet that can be adjusted over time (set it up by quarters so you can add or delete entries as things change). Try out this template for capturing information on your competitors.
Problem #2 - How can I get this information?
Remember the day when you had to go to a library to get information on anything. Life is so much easier now. There are many resources available from home (with an internet connection and computer) that you don’t need to leave your house to get all the information you need. You can gain an extraordinary amount of knowledge without much effort at all. Here are the types of information you can get about your competitors, where you can get this information and how you can use it:
- Branding, prices, services/products offered - Website, Facebook
Check out your competitor’s website. Take a look around. See how they are branding themselves by looking at their visuals and reading their content. Do they have their mission or vision on their website? Look at what products/services they provide and pay attention to what they charge for their products or service? Do they have any special discounts or clubs? Follow all their social media accounts (usually, there are links on their website). See what they are posting on their social media accounts. How long have they been active on social media?
HOT TIP - The best way to get current information on your competitor is to sign up for their newsletter. Then you will see how often they are publishing, what they are publishing and who they are targeting.
2. Competitor’s clients - Website (reviews and portfolio), Facebook (reviews)
Many websites have portfolios or recommendations from previous clients. Look at their portfolio. Who have been their previous clients? What clients have posted recommendations or reviews?
HOT TIP - Check out their reviews on Facebook or Yelp
3. Niche - Any social media platform, website, content
By following your competitor’s social media accounts and following their website, you will be able to see how they are positioning themselves in the market. What kind of specials do they offer? Who are most of their customers?
HOT TIP - Use a tool like Google Keyword Planner to see what keywords your competitors are targeting. Check out this article from Kissmetrics "25 Sneaky Online Tools and Gadgets to Help You Spy on Your Competitors“
4. Published content - Website, social media accounts, Google search
You are now signed up for your competitor’s emails, their newsletter (if they have one) and you have checked out their website and social media pages. Do a review on a regular basis to see how often they are publishing, what are they publishing, and where they are publishing.
HOT TIP - Perform a Google search to see where they are ranking and what articles are ranking higher.
5. Engagement with customers - Facebook (Insights) or Twitter list
Finding this information is the most fun (if you like spying)! You can use Facebook Insights to follow your competitor’s page (which will allow you to see how they compare to your page and other pages). No approval is needed to include their page under your Insights. Under your business page, click on the “Insights” Tab; go to the bottom of the page to the section titled “Pages to Watch”; add your competitor’s pages. From this area, you will be able to see their number of likes, the number of posts, and their engagement. You can compare their numbers to other pages and your own.
HOT TIP - Follow your competitors on Twitter. Add them to a special list for your competitor’s (remember that the name of your list can be seen in public so keep the name professional) and then you have a way to check on your competitor’s engagements on Twitter via a special list. How many likes and retweets are they getting?
6. What people are interested in their product/service - Twitter advanced search, Twitter list, Website comments, Facebook group
Check out who is following your competitor’s twitter account (use the Twitter list you developed above), who is commenting on their websites (if they allow comments), who is part of their groups (if they have a Facebook or LinkedIn group)?
HOT TIP - Use Twitter advanced search (www.twitter.com/search) to find a bunch of cool information. Make sure to click on “Advanced Search”. If you want to specifically know who is interested in your competitor, type their Twitter handle into the “To These Accounts” block. Advanced search can be used for so many cool things. Play with it and see what you can find!
Problem #3 - What do I do with this information?
The biggest product you should produce from all this new-found information is a SWOT (Strength, Weakness, Opportunities, Threat) analysis for your competitor and then for your business. Once you complete an analysis of your competitors you will be in a much stronger position to determine how you want to position your business. You can leverage your competitor’s weaknesses to be your strengths. You can target a customer base that your competitors are not reaching. You can fill in all the gaps your competitors are missing.
Problem #4 - Is this legal and ethical?
Ethics is a tricky thing. While most people realize that anything illegal crosses the boundaries of being ethical, what about legal activities that are just sleazy (like dumpster diving for a competitor’s records)? Anyone doing business on the internet is aware that information they submit is available to the entire public (this includes their competitors). Just don’t forget, the same holds true for you…. your competitors have equal access to your information. Pay special care to copying information. If you are referencing other’s information, make sure you are citing those references.
A good general rule of thumb to determine if something is ethical is to give it the “Newspaper Test”. How would your actions be perceived if what you did was posted on the front page of the newspaper?
Fred started at Yoda in amazement. He had no idea that so many tools were readily available to gain information on his competitors and he really started to understand how beneficial this would be to establishing his mission, vision and overall business plan.
Once again, Fretful Fred was eternally grateful to Yoda. Fred said, “Yoda, you give me so much value, I don’t know how to repay you. I will use this analysis of my competitors in a way that would make you proud.” Yoda said…